* Kindred Healthcare to acquire RehabCare Group
* China rate hike shifts focus to demand growth
* Futures: Dow off 7 pts, S&P off 1.2 pts, Nasdaq up 0.5
* For up-to-the-minute market news see []
(Updates prices, adds quote, byline)
By Rodrigo Campos
NEW YORK, Feb 8 (Reuters) - U.S. stock index futures were
little changed on Tuesday, with investors focused on corporate
earnings and the impact an interest rate hike in China will
have on global economic demand.
Investors said stocks could also be affected by how well
the auction of $32 billion of U.S. three-year notes proceeds
later on Tuesday. The sale is part of $72 billion in government
debt being offered this week. A hike in funding costs could
hurt corporate earnings.
Merger activity, which drove the Dow and S&P to 2-1/2 year
highs on Monday, continued Tuesday, with Kindred Healthcare
Inc's <KND.N> planned acquisition of RehabCare Group Inc
<RHB.N> to create a big post-acute healthcare services company.
For details, see []
China's central bank raised interest rates by 25 basis
points, its second increase in just over a month in a new bid
to tame inflation, while consumer prices in Brazil surged at
their fastest pace in nearly six years in January.
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"The China rise in rates is significant to the market,"
said Paul Mendelsohn, chief investment strategist at Windham
Financial Services in Charlotte, Vermont.
"Earnings are still coming in and they're good, and that
may be canceling out some of the negative news today."
With more than half of the S&P 500 companies' quarterly
results in, 72 percent have beat expectations.
S&P 500 futures <SPc1> dipped 1.3 points and were slightly
below fair value, a formula that evaluates pricing by taking
into account interest rates, dividends and time to expiration
on the contract. Dow Jones industrial average futures <DJc1>
fell 7 points, and Nasdaq 100 futures <NDc1> added 0.5 point.
Corporate earnings could once again dictate near-term
market direction, with Walt Disney Co <DIS.N> and Sara Lee Corp
<SLE.N> set to release results.
Teva Pharmaceutical Industries' <TEVA.O> shares fell 3
percent to $53.32 in trading before the bell after the world's
biggest maker of generic drugs reported results that fell short
of forecasts. [].
Exchange group NYSE Euronext <NYX.N> reported a
smaller-than-expected 21 percent fall in quarterly profit,
reflecting weaker trading activity amid growing competition.
[]
Intel Corp <INTC.O> said it will resume shipping known
configurations of a flawed chipset that work for use with its
new processors. The action was in response to demands from
personal computer makers that will use the chips selectively.
[]
Following Monday's gains, the S&P 500 faces resistance
around 1,325 with near-term support at 1,300 and 1,295.
Accelerating inflation in emerging markets, coupled with
recent upbeat economic data, could favor equities in the United
States and other developed markets.
Tokyo's stock market rose to a nine-month high, with market
players indicating better-than-expected earnings from U.S. and
Japanese companies have accelerated a shift of money out of
inflation-dogged emerging markets and into developed markets
with loose monetary policies and more subdued price pressures.
[].
(Reporting by Rodrigo Campos; Editing by Kenneth Barry)
